Reconciliation of Non-GAAP Financial Measures. Genesee & Wyoming Inc.

Transcription

1 Reconciliation of Non-GAAP Financial Measures 0

2 Non-GAAP Financial Measures This presentation contains references to Adjusted Net Income Attributable to G&W, Adjusted Diluted Earnings Per Common Share (EPS), Adjusted Operating Income, Adjusted Operating Ratio, the Adjusted Free Cash Flow measures of Adjusted Net Cash Provided by Operating Activities Attributable to G&W, Adjusted Free Cash Flow Attributable to G&W and Adjusted Free Cash Flow Attributable to G&W Before New Business Investments and Grant Funded Projects, and Net Adjusted Debt to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which are non- GAAP financial measures as this term is defined in Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of In accordance with these rules, G&W has reconciled these non-gaap financial measures to their most directly comparable U.S. GAAP measures. Management views these non-gaap financial measures as important measures of G&W s operating performance or, in the case of the Adjusted Free Cash Flow measures, important financial measures of how well G&W is managing its assets and a useful indicator of cash flow that may be available for discretionary use by G&W. Management also views these non-gaap financial measures as a way to assess comparability between periods. Key limitations of the Adjusted Free Cash Flow measures include the assumptions that G&W will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt. These non-gaap financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-gaap financial measures may be different from similarly-titled non-gaap financial measures used by other companies. The following tables set forth reconciliations of each of these non-gaap financial measures to their most directly comparable GAAP measure (in millions, except percentages and per share amounts). 1

3 Adjusted Net Income and Adjusted Diluted EPS Three Months Ended December 31, 2017 Income Before Income Taxes (Pre-Tax Income) Benefit from/ (Provision for) Income Taxes Net Income Attributable to G&W Diluted EPS As reported $ 84.7 $ $ $ 6.81 Adjusted for: Buyout of Freightliner deferred consideration agreements (8.9) - (8.9) (0.14) Australia impairment and related costs 4.9 (1.5) Corporate development and related costs 1.1 (0.4) Restructuring costs 1.4 (0.2) U.K. coal restructuring and related charges (1.1) 0.2 (0.9) (0.01) Impact of United States Tax Cuts & Jobs Act - (371.9) (371.9) (5.94) As adjusted $ 82.2 $ (30.5) $ 48.6 $ 0.77 Weighted average shares - diluted

4 Adjusted Net Income and Adjusted Diluted EPS Three Months Ended December 31, 2016 Income Before Income Taxes Provision for Income Taxes Net Income Attributable to G&W Diluted EPS As reported $ 28.7 $ (19.8) $ 8.9 $ 0.15 Adjusted for: ERS impairment and related charges U.K. coal railcar leases 10.5 (1.9) Corporate development and related costs 19.2 (3.4) Write-off of debt issuance costs 1.3 (0.4) Restructuring costs 1.9 (0.4) Q Short Line Tax Credit - (7.5) (7.5) (0.13) As adjusted $ 83.1 $ (33.4) $ 49.3 $ 0.84 Weighted average shares - diluted

5 Adjusted Net Income and Adjusted Diluted EPS Three Months Ended March 31, 2017 Income Before Income Taxes Provision for Income Taxes Net Income Attributable to G&W Diluted EPS Attributable to G&W As reported $ 49.2 $ 21.9 $ 26.2 $ 0.42 Add back certain items: Corporate development and related costs Restructuring costs As adjusted $ 58.4 $ 24.2 $ 32.9 $ 0.53 Weighted average shares - diluted

6 Adjusted Operating Income and Adjusted Operating Ratio by Segment Three Months Ended December 31, 2017 North American Australian U.K./European Operating revenues $ $ 75.5 $ $ Operating expenses Operating income (a) $ 74.6 $ 17.6 $ 16.0 $ Operating ratio (b) 76.7% 76.7% 90.9% 81.1% Total Operating expenses $ $ 58.0 $ $ Corporate development and related costs (0.9) - (0.3) (1.1) Restructuring costs (0.1) - (1.3) (1.4) Australia impairment and related costs - (4.9) - (4.9) Amendment of Freightliner deferred consideration agreement U.K. coal restructuring and related charges Adjusted operating expenses $ $ 53.0 $ $ Adjusted operating income $ 75.5 $ 22.5 $ 7.6 $ Adjusted operating ratio 76.4% 70.2% 95.7% 81.5% (a) Operating income is calculated as operating revenues less operating expenses. (b) Operating ratio is calculated as operating expenses divided by operating revenues. 5

7 Adjusted Operating Income and Adjusted Operating Ratio by Segment (cont.) Three Months Ended December 31, 2016 North American Australian U.K./European Operating revenues $ $ 61.4 $ $ Operating expenses Operating income (a) $ 83.4 $ 2.8 $ (32.6) $ 53.6 Operating ratio (b) 74.1% 95.4% 124.5% 89.6% Total Operating expenses $ $ 58.5 $ $ ERS impairment and related costs - - (21.5) (21.5) U.K. coal railcar leases - - (10.5) (10.5) Corporate development and related costs (4.0) (10.7) (1.3) (16.0) Restructuring costs (0.1) - (1.8) (1.9) Adjusted operating expenses $ $ 47.8 $ $ Adjusted operating income $ 87.4 $ 13.5 $ 2.4 $ FX (c) Adjusted operating income excluding FX $ 87.6 $ 14.0 $ 2.5 $ Adjusted operating ratio 72.9% 77.9% 98.2% 80.0% (a) Operating income is calculated as operating revenues less operating expenses. (b) Operating ratio is calculated as operating expenses divided by operating revenues. (c) Foreign Exchange (FX) impact is calculated by comparing the prior period results translated from local currency to U.S. dollars using current period exchange rates to the prior period results in U.S. dollars as reported. 6

8 Adjusted Operating Income and Adjusted Operating Ratio by Segment (cont.) Twelve Months Ended December 31, 2017 North American Australian U.K./European Operating revenues $ 1,274.3 $ $ $ 2,208.0 Operating expenses ,809.6 Operating income (a) $ $ 77.3 $ 17.3 $ Operating ratio (b) 76.2% 74.9% 97.2% 82.0% Total Operating expenses $ $ $ $ 1,809.6 Corporate development and related costs (8.2) 0.3 (4.0) (11.9) Restructuring costs (0.5) (0.3) (9.4) (10.2) Australia impairment and related costs - (4.9) - (4.9) Buyout of Freightliner deferred consideration agreements U.K. coal restructuring and related charges Adjusted operating expenses $ $ $ $ 1,792.5 Adjusted operating income $ $ 82.2 $ 20.7 $ Adjusted operating ratio 75.5% 73.3% 96.7% 81.2% (a) Operating income is calculated as operating revenues less operating expenses. (b) Operating ratio is calculated as operating expenses divided by operating revenues. 7

9 Adjusted Free Cash Flow Measures Twelve Months Ended December 31, Net cash provided by operating activities $ $ Allocation of adjusted cash flow to noncontrolling interest (a) (27.6) - Adjusted net cash provided by operating activities attributable to G&W Purchase of property and equipment, net (b) (201.4) (165.6) Adjusted free cash flow attributable to G&W (b) $ $ Net cash paid for new business investments Net cash received for grant funded projects (b) Adjusted free cash flow attributable to G&W before new business investments and grant funded projects 11.0 (1.6) $ $ (a) Allocation of adjusted cash flow to noncontrolling interest (MIRA's 48.9% equity ownership of GWA since December 1, 2016) is calculated as 48.9% of cash flow provided by operating activities of G&W s Australian, less net purchases of property and equipment of G&W s Australian. The timing and amount of actual distributions, if any, from GWA to G&W and MIRA made in any given period will vary and could differ materially from the amounts presented. There were no such distributions made for both the twelve months ended December 31, 2017 and G&W expressly disclaims any direct correlation between the allocation of adjusted cash flow to noncontrolling interest and actual distributions made in any given period. (b) See break out on next slide. 8

10 Adjusted Free Cash Flow Measures (cont.) December 31, 2017 Purchase of property and equipment Grant proceeds from outside parties Insurance proceeds for the replacement of assets Proceeds from disposition of property and equipment Purchase of property and equipment, net Core Capital (a) New Business Investments Grant Funded Projects (b) Total $ (188.6) $ (8.7) $ (31.2) $ (228.5) $ (181.8) $ (8.6) $ (11.0) $ (201.4) December 31, 2016 Purchase of property and equipment Grant proceeds from outside parties Insurance proceeds for the replacement of assets Proceeds from disposition of property and equipment Purchase of property and equipment, net (a) (b) Core Capital (a) New Business Investments Grant Funded Projects (b) Total $ (159.0) $ (26.1) $ (34.5) $ (219.5) $ (141.1) $ (26.1) $ 1.6 $ (165.6) Core capital expenditures represents purchases of property and equipment as presented on the Statement of Cash Flows less grant proceeds from outside parties, insurance proceeds for the replacement of assets and proceeds from disposition of property and equipment, each of which as presented on the Statement of Cash Flows, less new business investments Grant funded projects represents purchases of property and equipment for projects partially or entirely funded by outside parties, net of grant proceeds from outside parties as presented on the Statement of Cash Flows. 9

11 Adjusted Free Cash Flow Measures (cont.) Twelve Months Ended December 31, 2018 Guidance Net cash provided by operating activities $ 590 Allocation of adjusted cash flow to noncontrolling interest (a) (20) Adjusted net cash provided by operating activities attributable to G&W 570 Purchase of property and equipment, net (200) Adjusted free cash flow attributable to G&W 370 Net cash paid for new business investments Net cash received for grant funded projects Adjusted free cash flow attributable to G&W before new business investments and grant funded (40) (15) projects $ 315 (a) Allocation of adjusted cash flow to noncontrolling interest (MIRA's 48.9% equity ownership of GWA since December 1, 2016) is calculated as 48.9% of cash flow provided by operating activities of G&W s Australian, less net purchases of property and equipment of G&W s Australian. The timing and amount of actual distributions, if any, from GWA to G&W and MIRA made in any given period will vary and could differ materially from the amounts presented. There were no such distributions made for both the twelve months ended December 31, 2017 and G&W expressly disclaims any direct correlation between the allocation of adjusted cash flow to noncontrolling interest and actual distributions made in any given period. 10

12 Net Adjusted Debt/Adjusted EBITDA G&W Less: Australian Twelve Months Ended December 31, 2017 Total G&W (a) Adjustments (b) Acquisitions (c) G&W Net income $ $ 15.8 $ - $ Adjusted for: Provision for income taxes (261.3) (267) Interest expense Depreciation and amortization expense EBITDA $ $ $ 12.9 $ 7.0 $ Adjusted for certain items: Non-cash compensation cost related to equity awards Change in deferred considerations during 2017 (6.5) (6.5) Corporate development and related costs Restructuring costs Australia dividends, distributions of cash payments Net gain on sale of assets (1.5) (1.5) Hedging agreement expense U.K. coal railcar leases (3.9) (3.9) Adjusted EBITDA $ Total debt $ 2,331 $ 702 $ 5 $ 1,634 Add: Deferred financing fees Adjusted debt $ 2,356 $ 714 $ 5 $ 1,648 Less: Cash (4) 24 Net adjusted debt $ 2,276 $ 661 $ 8 $ 1,623 Net adjusted debt/adjusted EBITDA ratio 2.8 : 1.0 (a) Australia are excluded from G&W's Senior Secured Syndicated Credit Facility Agreement. (b) Adjustments based on Credit Facility Agreement. (c) Pentalver for 1/1/17-4/30/17 and HOG for 1/1/17-5/30/17. 11

13 Net Adjusted Debt/Adjusted EBITDA Twelve Months Ended December 31, 2018 (Guidance) Total G&W Less: Australian (a) Acquisitions/ Adjustments (b) Adjusted Net income attributable to G&W $ 240 $ 19 $ - $ 221 Add back: Provision for income taxes Interest expense Depreciation and amortization expense EBITDA $ 717 $ 148 $ 16 $ 585 Add back certain items Non-cash compensation cost related to equity awards Adjusted EBITDA $ 604 Total debt $ 2,087 $ 705 $ 5 $ 1,387 Less: Cash Net debt $ 1,970 $ 624 $ 5 $ 1,351 Add back: Deferred financing fees Net adjusted debt $ 1,986 $ 633 $ 5 $ 1,358 Net adjusted debt/adjusted EBITDA ratio 2.2 : 1.0 (a) Australia are excluded from G&W's Senior Secured Syndicated Credit Facility Agreement. (b) Adjustments based on Credit Facility Agreement. 12

14 Net Adjusted Debt/Adjusted EBITDA Australian Twelve Months Ended December 31, 2017 Australian Adjustments Adjusted Net income $ 16 $ 9 $ 24 Adjusted for: Provision for income taxes 6 6 Interest expense Depreciation and amortization expense EBITDA $ 139 $ 9 $ 147 Total debt $ 702 $ 702 Less: Cash Net debt $ 649 $ 649 Less: Shareholder loan (186) (186) Add back: Deferred financing fees Net adjusted debt $ 661 $ (186) $ 475 Net adjusted debt/adjusted EBITDA ratio 3.2 :

15 Net Adjusted Debt/Adjusted EBITDA - Australian Twelve Months Ended December 31, 2018 (Guidance) Australian Adjustments Adjusted Net income $ 19 $ 19 Adjusted for: Provision for income taxes 8 8 Interest expense Depreciation and amortization expense EBITDA $ 148 $ 5 $ 153 Total debt $ 705 $ 705 Less: Cash Net debt $ 624 $ 624 Less: Shareholder loan (186) (186) Add: Deferred financing fees 9 9 Net adjusted debt $ 633 $ (186) $ 447 Net adjusted debt/adjusted EBITDA ratio 2.9 :

16 15